Negative rates have been very unpopular and controversial in Sweden, says Karolina Ekholm, Professor of Economics at Stockholm University and former Riksbank Deputy Governor and State Secretary in the Finance Ministry. But the timing of their removal 'is a bit strange' and not uncontroversial either. One broader issue is that many people don't understand why it's so important to achieve 2% inflation. Why central banks should go to such extremes rather than accept somewhat lower inflation of, say 1-2%? Fiscal policy shouldering more of the burden would also help, as the policy mix in Sweden has been less than ideal.
Karolina Ekholm spoke to Beat Siegenthaler of the UBS Knowledge Network in Stockholm on December 9 2019.